Monday 5/9/2011

Greece, grease, grise grees, greze. You’re gonna hear a lot about Greece today. I wrote on this very topic in Revolution Investing a few months ago, the last time people freaked out about Greece. Europe troubles … again .

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Nuance is the big mover on the sheets today, now up 7%. Rumors out there that Apple’s considering buying the company. I don’t believe the rumor, but I am not selling it either. Nuance is still too cheap.

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Silver and gold are both up today, silver up 4%, gold up 1%. We covered our common stock short position and still have nice gains on our puts. I am not doing anything with silver and gold today, but were silver to get back closer to $40 again, I’ll likely look to add to the net short again.

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Here are my positions, in general order from largest notional position to smallest, though they all are about where I want them to be right now:

Click here to read my response to an e-mail from a subscriber who asked which stocks I would be buying or shorting right now.

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I did not trade today, but we had a nice pop in the portfolio despite the (as expected) moves in silver and gold going against us today. Corning was up more than 3% itself and as that and Nuance are two of our largest positions, we made out pretty green on the day. More on Nuance below and other than that, thanks for reading and I’ll see ya’ manana.

Some more details on the Nuance surge to a new 52-week high today, up 8% on the day alone and now up more than 20% from where we were buying it with you guys just a few weeks ago:

“So yes, it appears very likely at this point that a Nuance/Apple partnership is a big part of Apple’s cloud initiative. The next question is what this will mean, if anything, for developers at WWDC? Will they get access to this advanced voice recognition technology through iOS APIs right off the bat? Or will this technology mainly serve Apple’s own applications at first?”

And click here to read a good summary from some site called “Pink Sheet Insider” (note that Nuance is definitely not a pink sheet stock).

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Tuesday 5/10/2011

A gentle rally to start the day in the broader stock markets and in the precious metals too. And our portfolio’s up gently this morning too. Let’s be gentle traders today, shall we? Meaning, let’s not force anything but let’s dig in and look for some opportunities to trade without feeling pressure that we have to. Said another way, let’s only swing at great pitches, but we need to continue to stand at the plate and see what the market’s throwing.

And on that note, Microsoft is to buy Skype for $8.5 billion or about 10x Skype’s sales but less than 20% of Microsoft’s current cash balance and equal to about four quarters of cash flow at Microsoft. And the market takes the stock down 1.7%. More on that in a bit, but the upshot is that I think this was a very smart buy for Softee and I might look to add some more common there today.

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Instead of Microsoft common, I’ve ended up buying Microsoft call options, mostly with the $25 strike price, that will expire in January 2013. It always shocks me how cheap the premium for call options in Softee can be when the stock flatlines for a few months as it has been of late.

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With Riverbed and two of our other longsall up 3% plus today, we ended up nicely green by the close after bobbing up and down most of the day. We’ll take it. I bought those long-dated Softee call options and that was the only trigger pull of the day from my headquarters.

Nuance announced earnings after the bell, but that was already baked in because they’d pre-announced the upside to those earnings a few weeks ago, as I’d noted here in a post at the time. They also announced a small acquisition, which wouldn’t matter much to the stock price tomorrow one way or another except that traders who bought Nuance because they thought it would imminently be bought by Apple are likely to puke their stock tomorrow now that they know it’s not happening this week. Who cares, Nuance is still cheap, growing great, reported another good quarter and I’ll let it ride tomorrow. See you then.

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Wednesday 5/11/2011

Silver has dislocated itself to the downside again today, losing almost 5% this morning and making our iShares Silver Trust puts pop. Gold down. It sure seems to me that silver and not gold is the driver of the direction of the precious metals everyday.

Nice gains in the portfolio again this morning and I’ve not pulled any triggers so far today.

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The markets have fallen hard intraday, though it’s not a full 2% intraday swing and thus doesn’t meet the worrisome “dislocation” threshold. Regardless, the green on our sheets from this morning has mostly faded to red, though our SLV puts are now more profitable than ever after today’s 7% collapse in silver. Silver’s playing out just about like I’d said I thought it would last Thursday night, when I wrote that I expected to see it bounce again.

Holding my SLV and SPDR Gold Trust puts steady for now. A little more weakness in some of our smaller positions and I’ll probably start nibbling on some common stock to continue the steady-as-she-goes building process of my portfolio as I build it back up after three years of not trading. Let’s do this!

Really enjoying your trading with Cody subscription. I just joined and I am slowly building up my positions and love the story. So far all my positions are up, unlike my other stock newsletters that I cancelled today. – Clay

Hey Cody, I’m delighted with your analysis, and I’ve made way, way more than your subscription price on my trades. My NUAN Jan calls are up 157%! – Jim

First of all, CY, and now NUAN have many times over paid for my subscription, with every other trade above water, except RVBD [editor's note: RVBD is up 20% since we received this email]. – Dan

You paid for my subscription for the year. Bought the ZSL yesterday and probably sold early but got a 20% return in 24 hours. Great call. – Sarah

I made 20+% shorting SLV. I also made 100+% on SLV puts. I had to take the big profit off the table. Great timing from you. Thanks. – Larry

Flattish day for the portfolio by the close. After the close though, our second largest position, Cisco , reported very strong earnings and the stock is up 3%. That said, we won’t know how the stock will trade tomorrow until we hear from Cisco CEO, John Chambers, on the upcoming conference call in which he’ll give some outlook guidance and commentary about the direction of the economy and the company. See ya’ll manana.

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Thursday 5/12/2011

Cisco and silver are each down almost 5% in the early action. On the conference call Cisco’s CEO guided slightly lower again for next quarter for the fourth time in a row. I am digging through their report and others but the upshot is that I plan to hold my cisco position steady. We were adding to our cisco at these levels a few weeks ago and we are not far from my cost basis despite with today’s drop. My bad though. Back in a bit.

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What one stock taketh away, another giveth. (Flip it.)

The hits we’re taking in Cisco is being countered by the profits in Riverbed and Silver. Most of the rest of the portfolio is hardly budging and that means our portfolio is flat-to-slightly down on the day, much like the broader markets. I find myself almost disappointed that Cisco isn’t down more so we could really step up and build in another tranche. Patience required for now instead though, as we don’t want to be heroes as traders. We just want to make profits and avoid losses. Let’s let this stock settle itself down for the next day or two and then we’ll revisit whether we should add to it with either common or calls at that point.

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I do think Apple’s setting itself up to run in both the near-term as well as the longer-term, and as you guys know I see a $2k target on it in 10 years anyway. I’d like to build up my Apple common position, so I’m adding to my Apple today. Here’s a video we shot last night with me discussing the $2k Apple target with Stacey Delo.

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I am also buying some Google common stock today. I think, like Apple, it looks like it could get be getting ready to go on run. The momentum traders have left both names — Apple because it’s been so flattish for months now and Google because it’s been worse than flattish since it topped out even before that. These are two of the cheapest big tech stocks that, as we leave earnings season, are showing very impressive growth.

I priced some Google calls, but the premiums are just too expensive, so I’m sticking with common.

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Friday 5/13/2011

Germany’s GDP was apparently better than the results of some poll from some news organization of some idiot economists who think it matters if they can extrapolate the last three months worth of macroeconomic trends into a decent guess about what the bureaucrats who are paid to hedonize and modify and seasonally adjust government measurements of economic activity. Yup, that’s what most of the pundits and news outlets and many traders are actually focusing on today. Let’s note that Germany is doing better than most of the rest of Europe and let’s move on and focus on things that matter.

I’ve done a little bit of buying this week, like yesterday’s common purchases of Apple and Google, and we continue to build this portfolio using the opportunities and prices that the markets are giving us. Stay focused on our stocks and our revolutions. See you in a bit.

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It’s an ugly day in the markets and our portfolio’s red too. I just bought some Celestica common stock on its weakness today following its recent weakness in days of late. It’s still one of the cheapest and least-covered tech stocks in the world.

Cody Willard, a former hedge-fund manager, writes The Cody Word and Revolution Investing for MarketWatch. He also buys and sells investment instruments for his own account. Of the stocks mentioned in this article at the time of publication, Willard was net long Apple, Celestica, Cisco, Corning, Cypress, Google, Riverbed and net short GLD, SLV.

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About The Cody Word

Cody Willard writes the Revolution Investing investment newsletter for MarketWatch and posts the trades from his personal account at TradingWithCody.com He is the founder of WallStreetAll-Stars.com and the principal of CL Willard Capital. Cody serves as an adjunct professor at Seton Hall University and is on the University of New Mexico Alumni Board. He was an anchor on the Fox Business Network, where he was the co-host of the long-time #1-rated show on the network, Fox Business Happy Hour. Cody, a former hedge fund manager, and his stock picks and economic outlooks have been featured on NBC’s The Tonight Show with Jay Leno, ABC’s 20/20, CBS Evening News, CNBC’s SquawkBox, Jon Stewart’s The Daily Show, as well as in the Financial Times, Wall Street Journal, New York Times, and many other outlets.